Slovakian Bill for Government Services

Just like every year, INESS released the Bill for Government services few days ago. Although such information should be ideally provided by the government itself, Slovak government is somewhat reluctant to inform the society on costs of the functioning of the state. This is precisely why INESS decided to take up this task.

The revenues of the state calculated per every Slovak citizen, including newborns and hundred years old pensioners, will reach EUR 5,254 this year. It is EUR 440 per month, which is not a small amount compared to the average pension of EUR 400 or the average wage of EUR 830. However, it is still not enough, and covers only 93% of the expenditures. The state must borrow the remaining 7%. This means that the annual increase of the state debt calculated per citizen will increase by EUR 319 in 2015 and will reach a total of EUR 7,819 by the end of the year.

Moreover, it should not really be surprising that every Slovak citizen will have to pay EUR 443 more compared to the previous year. What is surprising is the speed of the increase of public finance revenues, which is one of the fastest in the EU: since 2012 the state collected EUR 3,200 m more on taxes and social contributions (17% increase!). GDP grew by only 7% and the average wage increased by 11%.

Combined, pensions and health care consume almost the third of the public finance expenditures. Every Slovak citizen pays EUR 936 per year to finance, paying off pensions of the current retirees. Pensions represent one fifth of the expenditures. Let’s bear in mind that now Slovakia has approximately 1 million pensioners (one fifth of the total population). In forty years, this number will reach 1.7 million pensioners and 1.7 million economic active citizens. The fun with financing the future pensions will begin soon.

Despite the pace of the revenues increase, the public finance deficit (in absolute numbers) is not decreasing and will reach EUR 2,000 m as in 2013. This is why the total debt is still growing, and that is also the reason why we pay twice as much just for the interest of national debt as for university education.

The Bill was distributed by SME, a widely read Slovakian daily newspaper, on May 21, 2015 in print, reaching tens of thousands readers. It also drew attention of broadcast national media.